FOMC member Stanley Fischer said that the stronger US dollar is offsetting some of the US benefits of ECB QE. This is yet another subtle sign of unease from the Fed regarding the rapid appreciation of the greenback.
EUR/USD is now extending its gains and hitting 1.0950. Will it top 1.10?
The fall of the pair was rapid, but also volatility has risen – it could make a comeback.
EUR/USD began the week with some range trading at somewhat lower ground and the pair hit a low of 1.0760. But from there, a fresh wave of USD selling, fueled in part by the Fed’s dovish tone last week, helped euro/dollar rise.
Fischer also said that rates hikes are likely warranted this year, but this isn’t new: Yellen already said that last week. There are doubts about the timing of the first hike and especially about the pace of the moves higher. Indeed, he also mentioned the uncertainty about the level of future rates.
Stanley Fischer is the Vice Chair. He doesn’t speak that often, but when he does, there usually is a significant impact. He is considered close to Fed Chair Janet Yellen.
Earlier, ECB president Mario Draghi spoke. The Italian repeated the optimism about the economic recovery in the euro-zone, but also made it clear that the recently launched QE program will continue in full speed.
More:
- The Dollar Dilemma – BofA Merrill
- EURUSD Will Move Through 1.1050: Elliott Wave Analysis
Here is how the recent strength looks on the €/$ chart:
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